The generational wealth transfer nobody is planning for – Getting ready for the next ten years

The UK is on the cusp of the largest transfer of wealth between generations in its history. Estimates put the total amount that will pass down over the next thirty years at somewhere between £5.5 trillion and £7 trillion, yet relatively few families have a clear plan for how or when that wealth should move.

This shift in the nation’s wealth is something we are discussing with a lot of our clients, as we want to ensure that the transition of wealth is as effective and efficient as it can be.

The scale of what is coming

Over the next decade alone, more than £300 billion is expected to pass to around 300,000 beneficiaries in the UK.

Within that figure, an estimated £127 billion is due to be transferred by around 36,000 high net worth individuals and a further £200 billion by around 770 ultra-high-net-worth individuals.

“Baby boomers”, people born between 1946 and 1964, who currently hold more than half of the UK's total wealth, largely in property and pensions, sit at the centre of this shift.

Why so few families are ready

Conversations about money and mortality are uncomfortable and many families avoid them until they become unavoidable. Many people are living longer than before and this is changing the dynamics of inheritance.

The result is that legacies often arrive later in a recipient's life than they are most needed, more often as a retirement top-up than as a boost in early adulthood to support, for example, the purchase of a home, as was historically the case.

Without planning, a meaningful share of that wealth can also be eroded by Inheritance Tax, particularly as thresholds remain frozen while asset values continue to rise.

What families can do now

Given the expected shift in wealth over the next decade, here are a few steps that we recommend that families take sooner, rather than later:

• Start the conversation early – Bringing the next generation into planning discussions earlier, rather than leaving them to find out the full picture after a death, tends to lead to smoother and better informed transfers.
• Review Wills and trusts – The 2027 changes to pension Inheritance Tax treatment mean many existing Wills and trust arrangements need revisiting to check they still achieve what was originally intended.
• Consider lifetime gifting – Making use of annual exemptions, gifts from surplus income and potentially exempt transfers while current rules remain in place can meaningfully reduce a future IHT bill.
• Put in place family governance – For family businesses or larger estates, clear governance around decision-making and succession reduces the risk of disputes when wealth eventually passes down. In some cases, it may be appropriate to create suitable trusts, which help to support decisions around intergenerational wealth.

Preparing the next generation

The mechanics of trusts, Wills and tax reliefs matter, but families that talk openly about wealth and involve the next generation in decisions consistently see better outcomes than those that treat the transfer as a single event to be dealt with at death.

If your family has not yet planned for the wealth transfer ahead, our team at Lubbock Fine Wealth Management can help you start that conversation and put a plan in place.

The information included in this article may be subject to changes in taxation following its publication. This article is intended for informational purposes only and does not constitute advice. The Financial Conduct Authority does not regulate estate planning.

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